Supplier group warns of extended inventory cycles due to rising tensions in Iran

Despite rising tensions in Iran, stockpiles of European goods should cover local demand for up to three months, according to the Macau Union Suppliers Association.

President of the association, Sunny Ip, recently confirmed that short-term supplies within the region remain steady and said that the city’s imports from Europe and Africa account for 10% to 20%.

He highlighted that the region’s diversified trade streams and stock reserves are sufficient to cover short-term demand; however, he predicts that imports of dairy from Europe are likely to rise in price due to geopolitical unrest.

Ip noted, “While retaining European supplies, suppliers have significantly increased purchases of dairy products from Australia, New Zealand, and mainland China, forming a diversified supply structure to withstand various supply chain shocks.”

Since the pandemic, the president said suppliers have prepared and learned how to avoid risks within their supply chains.

Macau’s unit value index increased by 1.9% in 2025, marking the sharpest increase since 2012, according to the Statistics and Census Service (DSEC). Ip described the trajectory as “clearly upward” and attributes the rising costs directly to severe disruptions on major trade routes.

The president explained that the crisis in the Red Sea has already doubled the shipping cycle between Europe and Asia from one month to over two. He warned that if the Strait of Hormuz remains closed, the shipping period could rise to three months or even longer.

His warning follows a recent Reuters report that the Iranian Revolutionary Guards said they would target vessels in the Strait of Hormuz and disrupt the world’s busiest oil shipping channel.

The impact is already being felt on specific European imports. Ip pointed out that shipments of Portuguese red wine, olive oil, and sardines are currently taking more than two months to reach Macau, double the original time, and he believes this may soon extend to three months.

These prolonged shipping times are driving up costs across the board. Ip also noted that freight rates are expected to climb due to rising oil prices, while exchange rate volatility in affected regions adds another layer of uncertainty to trade.

As a result, businesses are being forced to adapt their logistics. “With shipping times on the rise, businesses need to reserve longer inventory periods,” Ip said.

He concluded, “Rising costs across all stages of the supply chain will inevitably push up import prices.” Ricaela Diputado